Financing Cut

When we went into contract for the property that is currently being built as a green show house it was during the “normal” financial times of March 2006.

No storms were on the horizon and everyone was still giddy from the constant rise of funding and property prices.

Our plan was to do what we had always done when buying property: buy it with 10% down. We had great credit and a great track record of always paying our mortgages on time. We were in the real estate business.

Once in contract, though, the clouds started to gather, and we could not find any bank willing to lend for 10% down. The months went by and we scraped more money together. But no takers at 15% either. Nor 20%. Or 25%. Finally we found one bank willing to lend with 30% down and we closed on the property March 2007, one year later.

But it was not all dire. Everyone agreed, including the bank and mortgage broker, that once we closed we could refinance the house and pull some of that money out for renovations. After all, we all said, 30% was crazy.

But then the mortgage agent got laid off and the bank went into a tailspin. The storm had hit. There was no way they would give a home equity line of credit.

Luckily we had a home equity line of credit from another property. So we transferred that money to ou bank account and started renovations. Each week on Friday I would go to the bank and take money out to pay the workers.

But one week I went to the bank and there was no more money in the account. The bank had pulled the money from our account. No notice. No reasons. Basically they withdrew the loan.

Now we are funding the renovation from our businesses. Needless to say the budget is really, really tight.

The good news is that we are learning how to build green at well below what it would cost to build a “normal” structure. This is good for the long term.